Interview of the week

Radu MANOLIU, Deputy General Manager, CREDIT Europe Asigurari

The last two years have been challenging for the actors in the insurance market. How did CREDIT EUROPE Asigurari, one of the most dynamic and active companies in the field, overcome this period, we invite you to discover in an interview with...

XPRIMM: The
economic landscape of the past two years brought a series of challenges
for the insurance market. What were the main measures through which
CREDIT EUROPE contributed to maintaining stability?Radu MANOLIU:
All persons involved, directly or indirectly, in recent years, in the
underwriting activity had to face the increasing pressures of the
market, given the continuous and generalized decrease of premiums. As
expected, most of the prudential policies were abandoned, from the
beginning, gradually or in the end, in the face of these pressures, and
this led to the establishment of a dumping system, extended at least to
the types of insurance with significant market share. Fortunately, there
were enough exceptions from this "fight for survival", where the
adjustment process of the rates did not stop at the prudential
threshold, both for large size insurers, and for medium or small size
ones, so that the market would not yet destabilize; CREDIT EUROPE was
one of those exceptions, keeping its profitable underwriting principles,
with the assumed risk to register a drop in what market share is
concerned, but with the conviction that selection of clients based on
clearly defined technical criteria and auto-selection of customers due
to them going to insurers willing to increase/maintain market share at
all costs can only generate positive financial effects - especially
after the domestic insurance market going out of the crisis.Maintaing
the desirable part of the portfolio of clients, our current priority in
terms of underwriting, determined, primarily, the continuous decrease
of the claims frequency for Motor Hull insurance - from 56%, for
policies issued in 2008, to 47% for policies issued in 2010. On the
other hand, more effective partnerships with the major repair units that
we collaborate with has determined the continuous decrease of the
average claim corresponding to Motor Hull insurance - from EUR 1,112 for
policies issued in 2008, to EUR 898 for policies issued in 2010.
Positive evolution of these two indicators allowed us to maintain high
quality of services of claims handling and solving, that our customers
are used to, without negatively influencing the financial results of the
company. As an implicit consequence, we can consider that we have
contributed, to a certain extenet, to maintaing good collaboration
relationships between insurers and repair shops - which can only have
beneficial effects in terms of customer perception regarding market
stability.We can consider that we have contributed to maintaining
the overall stability even by the simple fact that we were able to
efficiently manage the financial resources that we have obtained and we
were able to save by reducing some costs, such as those related to
reinsurance (as a consequence of improving technical results, in the
sense of the above-mentioned ideas). Last but not least, we believe that
we have contributed to creating an image of stability of the market,
including through the active involvement in the PAID project.

XPRIMM: How
was the first quarter of 2011 for the company? How did the
underwritings evolve and what were the main positive evolutions? Based
on these results, what do you expect from 2011?R. M.:
It is known that insurance market development is delayed by at least
several months compared to the rest of the economy, therefore the
overall decrease of the underwritings in the first quarter of 2011
should not surprise anyone; CREDIT EUROPE did not make an exception from
the expected negative evolution of the market, registering the first
significant decrease in the company's history, in terms of gross written
premiums volume - due to the considerable decrease of the leasing
portfolio, the banking one and the one generated by direct sales. If we
refer, however, to the number of issued policies, we note not only the
lack of a similar effect, but even a significant increase, of 45%,
compared to the similar period of last year. Moreover, the perspective
changes radically if we refer to the number of policies issued by
independent brokers - up by 126% compared to the same period last year.
Aforementioned increases are due, however, mainly to the additional
portfolio generated by the issuance of PAD policies, and their large
number could not compensate, in terms of value, the volume declines
registered on other lines of business.Regarding the expectations for
2011, the fact that we recorded a substantial increase of the portfolio
of clients, be they simple PAD buyers, during the first quarter, in
terms of profitability, entitles us to hope that at the end of the year
we will register a level of gross written premiums close to that of
2010. Basically, we hope to assist to lowering the intensity that
characterizes the current fierce battle for customers, so that the
premium rates to be established again, at market level, mainly based on
technical prudential criteria, and customers and potential customers to
reconsider both their insurance needs and the degree of costs
acceptance.

XPRIMM: What
do you estimate the 2011 trends will be on the motor class - especially
on the Motor Hull insurance segment? Do you intend to launch new
products that would contribute to a revival of the underwritings on this
segment? R. M.: Besides
the prolonging of the current tensions, generated by the mentioned
"struggle for survival", I think we will see more and more numerous
launches of niche products - both in terms of aimed categories of
clients and in terms of services offered. We will remain faithful to our
policy of profitable underwriting, but we will try to approach things
from a new simplified perspective, according to the current situation of
the market; more precisely, we intend to launch an innovative product
for the domestic Motor Hull market, through which to offer in advance,
as a special discount at underwriting, the bonus correspondent to the
alleged year of insurance without claims - the benefits remaining
unaltered in the absence of claims without possibility of administrative
clearing to another insurer.

XPRIMM: Referring
to household insurance, it is seen as the opportunity of 2011. However,
the degree of insurance coverage is still very low, which means that
the voluntary policies did not receive the expected impetus, either.
What evolution do you think this segment will have and what is the
company's strategy in this regard? R. M.:
Given the current stage of the PAID project and the fact that mandatory
insurance is no longer perceived as last year, I do not think that
household insurance will be perceived as the opportunity of the year
2011. A significant increase in volume will be recorded, most probably,
not until late 2011, the growth rate depending, however, by the measure
and the way in which the fines correspondent to houseowners that did not
insure their households will be applied and mediatized. Like all
the other insurers involved in the PAID project, we are also especially
interested in cases of potential customers who perceive correctly the
necessity of insurance and are willing to also consider a voluntary
option; experience has shown us, however, that in the context of the
above-mentioned dumping system, more and more customers have demands
increasingly harder and harder to satisfy regarding the cost considered
reasonable for a complex household insurance policy. We have not yet
determined a way to counteract this trend; it is certain, however, that
we will get involved again, in the second half of the year, in the new
attempt to normalize the status quo corresponding to household
insurance.

XPRIMM: One
of the main ways to maintain the volume of underwritings is to
strengthen the relationship with brokers. How do you view the
relationship with insurance brokers and what is its role?R. M.: Collaboration
with independent brokers still represents our strategic priority in
what distribution networks are concerned; however, I like to think that
most of the partnerships that have emerged in the last 2-3 years
transcend the usual scope of the insurer-broker relationship, both in
terms of strictly professional side, and interpersonal one. If the
degree of cohesion is the one assumed above, this is due primarily to
the fact that we have always been open in relationship with our partners
in the brokerage market - the transparency that characterized us being
essential for correct transmission of information to the clients they
represented. In the core of our philosophy of collaboration with brokers
have always been, in other words, their representatives - in
relationship with whom we have always placed ourselves at the same
level, as we have understood that was the only way in which we could
have total trust in each other.